California job surge could squeeze low- and middle-income workers

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A home that was sold is shown in Palo Alto, Calif., Thursday, Dec. 2, 2010. The number of people who signed contracts to buy homes jumped in October 2010, marking the third gain since contract signings hit a decade low. (AP Photo/Paul Sakuma)

California’s boom in high-wage jobs, such as those in the tech sector, has shoved housing prices skyward and threatens to squeeze low- and middle-income wage earners out of the Golden State, a report released Wednesday warned.

Those disturbing findings were contained in new research compiled by Beacon Economics and commissioned by Next 10, a San Francisco-based think tank.

“It’s not a question of people having jobs, because there are a lot of jobs in California,” said F. Noel Perry, a business executive and founder of Next 10. “It’s a question of whether people can afford to live in California.”

The state’s economic trends, while they offer prosperity to a wide array of residents, also are creating painful pressures on many who are unable to afford the cost of housing.

“The state has been growing its employment at nearly 3 percent a year,,” said Christopher Thornberg, principal economist and founding partner of Beacon Economics. “If we don’t build enough housing, where will the new workers live? If they don’t have a place to live, how will we fill these jobs?”

Housing prices are rising at a time when California has experienced an influx of low-wage workers, the Beacon study determined.

Over the five years that ended in 2014, the most recent year for which these statistics are available, the number of low-wage workers coming into California increased by 16.1 percent, according to the Beacon research. The number of middle-wage workers rose 11.2 percent, and the number of high-wage workers increased 6 percent.

One of the big problems is that upward mobility is more difficult to come by in California despite its burst of high-paying tech jobs. That’s because many factory jobs have vanished, which has erased a slew of decent-paying jobs for the middle class.

The most robust high-paying jobs, typically in the technology sector, require skills right away. The employment and skills path is potentially difficult for people to work their way up from waiting tables to writing code at Google, Apple or Facebook.

“If you want to break into the technology field, you have to arrive with buy-in skills, ability to do coding, understanding of electronics, digital design skills, network architecture,” said Russell Hancock, president of San Jose-based Joint Venture Silicon Valley.

The pressure on housing for middle- and low-income workers is particularly acute in the Bay Area, the world capital of the technology industry.

Silicon Valley and the Bay Area increasingly are in danger of becoming more like a Manhattan of the West Coast that is dominated by high- and low-income workers, along with a shrinking middle class, Hancock said.

The study cited a report that showed that of the 10 metro areas with the worst home affordability in the United States, six were located in California. Santa Clara County was listed as the region with the worst home affordability. The San Francisco-San Mateo area was listed as second worst.

“While California innovation and entrepreneurship are driving business creation and job growth across the board, we don’t have enough housing,” Perry said. “That’s causing an affordability crisis.”